Is the Supreme Court going too easy on overseas corporations?

Late last month, drowned out by near-daily White House scandals, the U.S. Supreme Court shut the doors on a whole suite of international human rights claims, ruling in Jesner v. Arab Bank that victims of corporate malfeasance overseas may not use U.S. courts to hold businesses to account.

In this case, the plaintiffs were 6,000 people whose relatives had been killed or injured by suicide bombers in Israel. The defendant was the Arab Bank in Jordan, which, they claimed in the suit, used its New York branch to process payments for a terrorist-linked charity based in Texas, which used the funds to compensate the families of suicide bombers. The bank says the transactions were automated and it had no awareness of them, and the Supreme Court essentially decided that whatever really happened, the U.S. courts were not the right place to find out.

While not a surprise, the decision brings to an end a modern crusade by human-rights campaigners to use the 1789 Alien Tort Statute as a tool to hold corporations to account for overseas violations. The statute is a simple one-line piece of legislation written in the first session of Congress, specifying that “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” Starting with a 1980 decision in the U.S. Court of Appeals for the 2nd Circuit, the law had become the basis for a cottage industry in which plaintiffs used the statute to shine a light on torture and wrongful imprisonment (sometimes corporate-sponsored) in places ranging from Asia to Africa – sometimes, though not always, making a link to business activity in the United States.

Before its recent decision, the Supreme Court had already been backing away from such expansive uses of the law. In 2013, it ruled unanimously in a case called Kiobel v. Royal Dutch Petroleum that a company couldn’t be held accountable for killing and torturing oil workers in the Ogoniland region of Nigeria unless there was a close nexus to the United States. That ended the idea that a company could be held liable without a clear American connection—but the court hadn’t ruled on the question of whether corporations could be sued under the Alien Tort Statute at all. That’s where last month’s Jesner decision came in: Justice Anthony Kennedy wrote for the majority that only flesh-and-blood human beings can be sued under the act. So as of now, the Alien Tort Statute only allows cases brought against individuals over acts with established connection to the U.S.

It might seem strange for U.S. courts to play a role in overseas wrongdoing at all, but there are good arguments from both liberals and conservatives that they should. Sens. Lindsey Graham (R-S.C.) and Sheldon Whitehouse (D-R.I.) signed a friend of the court brief supporting use of the Alien Tort Statute to go after companies that help finance terrorism and other crimes. And more broadly, the reality is that big economies often play this role on the world stage, one way or another. America’s deep financial markets are an appealing place for foreign governments to park their cash, which means U.S. law already plays a global role in sovereign debt and anti-money laundering policy. The European Union, meanwhile, is increasingly taking the lead role on regulating consumer products and tech firms, as research by Georgetown University political scientist Abraham Newman shows. The issue isn’t whether American courts should influence happenings from Jordan to Argentina, it’s how.

In a blistering dissent to the Jesner decision, Justice Sonia Sotomayor argued that the plaintiffs’ reading of the law was very much within its original intent, and still had value today. Noting the 1789 act’s close link to piracy, she wrote that the U.S. still has an interest “in preventing our Nation from serving as a safe harbor for today’s pirates,” who often operate through finance and corporate forms. Even aside from the global fight against terrorism, there’s a U.S. interest in seeing our standards upheld as widely as possible – at home and abroad. (Even Kennedy appeared to concede this, saying that investment overseas by U.S. companies “contrib­utes to the economic development that so often is an es­sential foundation for human rights”— or, in other words, that it does make sense to consider the effects American institutions have around the globe.)

Sotomayor also pointed out a fundamental unfairness at the heart of the Jesner decision: She argued that it “allows [corporations] to take advantage of the significant benefits of the corporate form … without having to shoulder attendant fundamental responsibilities.” In other words, by letting companies do business in the U.S. but evade American and global human-rights standards, the court was letting them have their cake and eat it too.

The ruling appears to be a part of a pro-corporate pattern when it comes to the court’s view of its global role, and one that doesn’t always follow the political lines you’d expect. The 2014 BG Group v. Argentinacase was a bizarre mirror-image of Jesner. There, the court ruled that U.S. courts were an acceptable venue for global corporations seeking to collect damages from governments over changed regulations. Much like the Arab Bank case, the connection of the underlying events to the U.S. was tenuous: There, a British bank had won an arbitration ruling against Argentina over changes to regulations in the wake of that country's financial crisis; to actually claim its winnings, it asked a U.S. court to confirm the award, a first step toward ultimately seizing Argentine assets located in America.

Unlike that case, it was the court's liberal justices that sided with the corporation, saying that U.S. courts should adopt a deferential view when investors assert broad rights.

In a highly globalized world, the picture emerging from America’s highest court is of a playing field in which corporations enjoy plenty of rights, and the rest of us face a shrinking set of tools to hold them accountable. If the U.S. does want its court system to retain its influence on the world stage, there are plenty of routes going forward, and all three branches of government have a role to play.

One of them is in the hands of the Supreme Court. Also last month, the same day as the Jesner ruling, the justices heard oral arguments in a case brought by Animal Science Products, Inc., a Texas-based company, against Chinese monopolists of vitamin C. With the world supply of the vitamin now controlled by just a few Chinese companies, lower courts had ruled that U.S. judges must defer to Chinese officials in the name of intergovernmental comity, rather than apply our antitrust laws on a global basis when monopolists hurt U.S. commerce A decision by the court that overseas price-fixing is a fair target for U.S. litigation would benefit not only the Texan company that stands to profit from lower prices, but consumers—and the global markets that open up when any country uses its laws to address concentrated corporate power. This, too, would be part of a distinguished American tradition: “Radical Markets,” a new book by conservative-leaning scholars Eric Posner and Glen Weyl, argues that the American antitrust law of a century ago, spreading first to Britain and more broadly, was a positive force for world markets.

Congress has a job here as well. A rewritten Alien Tort Statute could make clear that U.S. courts will be as open to foreign human-rights defenders as they are to foreign businesses—and that companies need to be good citizens as we protect their arbitration wins. And the White House has its own role. The North American Fair Trade Agreement talks currently underway also present an opportunity to enforce these values at the North American level by pushing back on that 2014 BG Group decision,and committing the U.S., Canadian and Mexican courts to serve as more than a rubber stamp on international arbitration decisions. So the next time a corporation tries to go after sovereign assets in U.S., Canadian or Mexican courts the way the British bank investors went after Argentina’s assets, they'd have a harder time.

The small-c conservative tilt of the Supreme Court will matter less if the other branches of government do their job. Justice shouldn't be held hostage to a 229-year-old statute.

Todd N. Tucker is a political scientist and fellow at the Roosevelt Institute, and author of “Judge Knot” (Anthem Press). Follow him @toddntucker.